Elon Musk, Tesla, and Lean Leadership

As I listened to Lesley Stahl’s interview of Elon Musk during the December 9th edition of 60 Minutes, I thought to myself, “Musk is a Lean leader.” Before reflecting on Elon Musk and Lean leadership…and to possibly sooth the ire of some of my readers…Yes, I recognize that many of Tesla’s initial manufacturing practices ran counter to Lean thinking. Things I read about these practices caused me to cringe, especially when remembering that I had done team-building training in Tesla’s plant 30 years earlier when it was occupied by NUMMI, a joint venture of Toyota and GM and a model of Lean manufacturing.

Despite Tesla’s well-documented manufacturing missteps, the leadership provided by Elon Musk since he became Tesla’s CEO and Product Architect in 2007, provide valuable lessons in what’s required to take a company that was a very marginal player in its industry and transform it into a technological leader of this industry. The fact that Tesla is now successfully manufacturing vehicles and making money doing it is to a large degree the result of Elon Musk’s transformational leadership, leadership that also happens to reflect three of the major precepts of Lean manufacturing. And here they are.

1. While productivity and profitability are important, the prime drivers of highly successful companies is having a clear understanding of the ways in which what the company does makes life better for the world outside of the company as well clearly demonstrating a concern for the well-being of its employees.

In his interview on 60 Minutes, Musk said “The whole point of Tesla is to accelerate the development of electric vehicles and sustainable transportation, to build cars that don’t harm the climate and help save the planet.” He added, “Our employees believe in the dream.”

All of us have a need to lead lives that aspire toward a higher purpose. Too many of us can only meet this need outside of our workplace. As a result, we are often emotionally detached from the company that pays us. What a difference it makes when employees believe the work they are doing will make life in the future better for their family, their friends, and their neighbors. When employees have this view of the work they do, seeing it as being related to a meaningful mission that extends beyond the making of money, great things happen. It transforms work from drudgery to an experience often filled with moments of joy. That’s the power of “Our employees believe in the dream.”

In addition, highly successful organizations have work environments with many of the characteristics of a very healthy family. People care for each other at a personal level. I saw evidence of this on the assembly line at a Toyota plant in Princeton, Indiana. An employee had posted this note on one of the bulletin boards on the line: “It really made me feel great to be able to help one of my team members with a personal problem.” And that’s exactly what members of healthy families feel when helping one of their members.

The team-building training my group provided at NUMMI was also a good example of what happens when a company is committed to making life better for its employees. During a production shutdown. rather than laying off the production workforce, Toyota/GM kept them on the payroll and contracted with the company I worked for to provide training for them. The impact of this was obvious in the reactions of their employees to our training. They were upbeat, engaging in active, productive discussions. Radically different than the sullen, angry workers I encountered in doing training at automotive plants in Detroit in the mid-80s.

As Elon Musk reflected in his 60 Minutes interview, his experience in opening a third assembly line at Tesla brought home to him loud and clear the importance of the human factor in manufacturing. He remarked with a smile after noting that this line was de-robotized, “Humans are underrated.” All life is a continuing learning experience; for you, for me, and for Elon Musk.

2. Being aware that a leader’s presence on the line can have a very positive impact on employee morale.

Musk has said that during Tesla’s drive to increase the production of their Model 3 to 5,000 vehicles per week, he was on the factory floor day and night. When asked why he did this, he replied, “The team needed to see that however hard it was for them, I’d make it worse for me.” Tesla met its goal and is now producing 5,000 Model 3s per week.

One of the key teachings of Lean manufacturing is that leaders need to “go to the Gemba,” meaning going to the place where their products are made. And why is this so important? One reason is that workers need to see that their leaders are fully committed to success of the company and are not asking them to do any more to drive this success than they ask of themselves. Another is that by doing this, leaders will learn more about how production happens.

Taiichi Ohno, one of the key architects of Lean manufacturing, has said, “Some managers spend their time focusing on numbers. I don’t call that management, I call that monitoring.” I’ve seen plant managers who thought management involved little more that monitoring the results of production, rather than managing the processes that drove the results. They got fixated on numbers like these, for example:

• Is the bottling equipment turning out 20,000 bottles of water a day?

• Are the presses stamping 450 headrest bars per hour?

As a result, they were, at best, doing nothing more than maintaining the status quo, a sure recipe for failure. Tesla’s success has been built upon breaking with the status quo every step of the way. And its success has also been built upon being led by a leader with a detailed understanding of the work processes used to build its products. Musk and other Tesla employees are keenly aware of the need to meet production goals. They also know that it is finely tuned work processes, engaged in by employees unified by a common vision, that will result in these goals being met. If Elon Musk was the plant manager of the beverage company at which I did consultant work he wouldn’t be fixated on “is the bottling equipment turning out 20,000 bottles of water a day?”

3. Having the ability to admit mistakes and to learn from them.

One of the apocryphal Lean manufacturing stories has to do with what happened to a young man named Dave shortly after he came to work at Toyota’s plant in Georgetown, Kentucky in the late 80s. Dave was in an entry level management position and attending his first meeting with the plant manager. As he described this experience twenty-five years later, this is what happened. The plant manager asked me, “Dave talk about how things are going in your area.” I responded by describing all the good projects that were underway in my area. I got about 30 seconds into my reply when the plant manager stopped me and said, “Dave, stop! From now on when I ask you this question all I want you to talk about are the mistakes you and your team have made. And, by the way, I’m going to share all the mistakes I made. Together, we’re going to put all of our mistakes on the table where we can begin to solve them.” Dave wrote “it was at this point that I understood what really drove the success of Lean manufacturing. Candor, mutual trust, and respect.”

Nothing humanizes a leader more than admitting to having made mistakes. Musk, in the 60 Minutes interview, said, “Depending on excessive automation at Tesla was a mistake. To be precise, it was my mistake. Humans are underrated.” He added, “People are way better at dealing with unexpected circumstances than robots.”

Mistakes are great opportunities to learn. Elon Musk learned from the mistakes made in the initial design of the Tesla production line. And by recognizing these mistakes he opened the door to his employees being more willing to openly talk about mistakes they had made.

These three characteristics of Lean leadership, Elon Musk style, were what made it possible for Tesla to meet a challenge to its very survival. Musk said that while attempting to reach a production goal of 5,000 Tesla Model 3s per week, the company was losing between $50 and $100 million a week. Clearly more of the same on existing assembly lines wasn’t going to allow Tesla to meet its survival level production goal. What was called for was a very creative, out-of-the-box method of meeting this challenge. Musk and his team met the challenge. Within three weeks they had, as Musk described it, “created a general assembly line out of nothing, producing Model 3s in a huge tent on our parking lot and driving a 50% increase in output.”

Tesla’s survival was made possible because:

It was a company driven to achieve a vision of producing vehicles that didn’t damage the environment, making life more sustainable on our earth,

It was a company led by a leader who was very visible on the line,

It was led by a leader who admitted to making mistakes and who learned from these mistakes.

And that’s what Lean leadership is all about. Creating an employee-centric workplace, unified by a common vision of the higher purpose of their work. Having a leader who is in the trenches with front-line employees as they work to meet production goals. Having a workplace culture that reflects an understanding that it is only through the making of mistakes that progress is made.

It’s possible that Elon Musk doesn’t know he’s a Lean leader, but he sure does act like one.

About George Friesen

George Friesen serves as Business Practice Leader - Lean Manufacturing for the Workforce Solutions Group of St. Louis Community College. He has led the College's Lean business practice area since 2000. Prior to joining the College, George worked for Maritz Performance Improvement Company. Over the past 35 years, he has served a wide variety of Fortune 500 companies, specializing during the past eleven years in Lean Manufacturing, focusing especially on the 5S System, Lean leadership and thinking processes, Value Stream Mapping, and Lean team building. George is a graduate of Washington University (AB), Webster University (MA), and United States Air Force Flight Training.

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